Don't know anything about them but per my calculations they are taking 27.2% of the capital appreciation on the New Braunfels deal at the end per their projections which seem optimistic in this oversupplied environment, (Austin MSA with largest new multi-family projects coming out this year in the country ,8% of total existing stock and already seeing rent rate declines of near 10%in the city so far) and they are taking a big chunk of the monthly cash on cash as the preferred payouts for their 3 different classes are well below the projected cash on cash total. (They concentrate/force the equity into their class B shares 13/18 million so they get 72% of the future capital appreciation at the higher 30% cut,
versus 5/18mil at the lower 20% rate) They also seem to be overpaying in this downward trending multi-family environment. Also, per their numbers they are buying for 37 mil, debt 24 mil, equity 20 mil, 44mil minus 37 price = 7 million in closing costs, which is 35% of the total equity, RE commissions of say 4% total 1.5 mil so they are taking 5.5 million in fees up front as well minus the inspections/loan fees etc. They appear to be really soaking their unsophisticated investors, my guess they focus on doctors, and it's a risky place and time to be buying too. good luck
4/18/24 update, i don't mean to dump on them, Viking Capital LLC. I just think now may not be the best time to buy multi-family in formerly Hot markets, like Austin MSA, that are clearly going down in price. Austin Rent rates also down 6% per Yardi-Matrix data, from 1 yr ago. Their slide deck, 85 pages is on their website, They believe that they will increase the properties NOI by 45% over 5 yr hold, mostly through rent increases after doing 5K interior upgrades in all 252 units, thus adding 19 million to value of property. They are buying at a 5 % cap rate with a fixed 5.7% loan amortized at 30yrs and first 2 yrs interest only, and they believe that they will sell at a 5% cap rate as well 5 long years from now. I don't know about this cap rate projection, at least in CRe-Retail we project out a 10 basis point rise in cap rate for each year the property ages, so the Cap rate may be 5.5% assuming interest rates don't budge, (probably heading higher as US Govt has to deleverage its last 40yr debt run-up, like we did between '45 and '82, and we did again btwn 1899-1920, same 30-40 pattern going back to mid-1800s)
I watched all their videos/podcasts/available webinars. They are very well organized and very professional, and their reported past results are exceedingly good at 24% avg annual return, but that was then (lowest interest rates in 90 years, CAP rates compressed from 8 to 3) and now is now.
But no one Knows Nothing, so they could knock it out of the park, or slow bleed money for years.
Good luck Aman
